The Section 32 Vendor’s Statement (Section 32) must be prepared by, or on behalf of, the vendor, and served on any person who wishes to purchase the vendor’s property before the contract of sale is signed. There are serious consequences for the vendor if this procedure is not followed.

What is the Section 32?

A legal document

The Section 32 is a document provided by the seller of real estate (vendor) to an intending purchaser.

Its name comes from Section 32 of the Sale of Land Act, which requires a vendor to provide certain information to a purchaser BEFORE a contract of sale is signed.

In general terms, if the vendor fails to provide the information required by the Act before the contract is signed, the purchaser will be able to cancel the contract. Of course, there are exceptions to this rule, and purchasers should not assume that any “technicality” will allow them to end the contract.

Before a contract is signed is the best time to get legal advice from a qualified lawyer, as the opportunities to end the contract can be severely limited if legal advice is sought after the sale has been finalised.

In recent years, the information required in a Section 32 has been expanded and extended. Interpretation of the Section 32 requirements, particularly those relating to building works undertaken by an “owner-builder”, can be quite confusing. In addition, failure to comply with some of the rules can attract huge monetary penalties.
See What’s in the Section 32 for information on what is required in a Section 32

Who prepares the Section 32?

It should be prepared by a lawyer

The Section 32 should always be prepared by a qualified lawyer. While this is not stated in the Sale of Land Act, the fact that it is a legal document means that a vendor must be given competent legal advice by a qualified lawyer in order to understand the responsibilities associated with the preparation of the Section 32.

Criminal offences in Section 32

For example, a vendor who knowingly or recklessly provides false information, or fails to provide ALL of the information required by Section 32 commits a CRIMINAL OFFENCE, and can be fined.

A vendor who commits a criminal offence because they were not properly advised by a real estate agent or conveyancer (both of whom routinely prepare the Section 32 for uninformed consumers) will be told by the estate agent or conveyancer “I am not allowed to give you legal advice, because only a qualified lawyer can give legal advice or perform legal work”.

How the Section 32 is provided

Usually, the Section 32 is prepared by the vendor’s lawyer, and delivered to the real estate agent. The agent then makes the Section 32 available to purchasers.

Where the vendor is selling without the involvement of an agent, the vendor’s lawyer will usually provide the Section 32 direct to the purchaser, or send it to the purchaser’s lawyer.

Who must sign the Section 32?

Statement by the vendor

The vendor is the only person who is required to sign the Section 32. The vendor may sign personally, or through their legal representative.
Most agents will tell purchasers that they too must sign the Section 32.
This is not necessary. It is only to protect the estate agent. By having the purchaser sign the Section 32 the agent is able to prove that a copy of the Section 32 was delivered to the purchaser BEFORE the contract was signed. This is the one and only reason why purchasers are asked to sign the Section 32.

When must the Section 32 be provided?

Pre-contract disclosure

The Section 32 must be provided to a purchaser BEFORE the contract is signed.

Sometimes an agent will have the purchaser sign a contract first, and include a special condition in the contract stating that the sale is subject to the vendor providing the purchaser with a copy of the Section 32. In such circumstances the sale is fatally flawed, and the purchaser is entitled to cancel it.

What is in the Section 32?

The following is a list of the basic information found in a Section 32. Further information may be required -it depends on the property being sold. (Remember, legal advice from a qualified lawyer should always be sought regarding the information contained in the Section 32, and what information SHOULD be included).

Basic information in the Section 32:

Statutory warnings to the purchaser

Vendor’s details

Title details

Information regarding building permits issued in the past 7 years

Particulars of owner-builder warranty insurance

If the vendor is the owner-builder who completed building works there should be a written inspection report (which lists any defects) in the Section 32

Particulars of any mortgages or “charges” over the land (i.e. debts charged against the land)

Information regarding covenants, easements and any other restrictions on title (whether or not they appear on the title)

Planning information, particularly where zoning restricts land use

Information regarding outgoings payable by the owner of the property

Disclosure of any notices or orders issued by the authorities, regarding fencing, road-widening, sewerage etc…

If there is access to the property by road

Information on services connected to the property

But what is NOT there?

Remember, it may appear safe to receive a Section 32 that discloses no adverse information about the property – but the question remains: what SHOULD be there, but is NOT there?

What if the Section 32 is defective?

Criminal offence

As discussed above, it is a criminal offence for a vendor to deliberately or recklessly provide false information, or to fail to provide all of the required information. A person found guilty of this is liable to a penalty of 50 penalty units.

Cancellation of the contract

Where a vendor has failed to comply with the provisions of Section 32, a purchaser may be entitled to end the contract at any time, up until the day of final settlement. This can result in huge costs to a vendor. The vendor may still have to pay a full commission to the estate agent, then a second commission if the property is to be sold again, plus legal costs, plus the cost of the purchaser’s loss.

Of course, there are exceptions. A mere technical breach may not result in cancellation of the contract. Legal advice should be sought before assuming anything with regard to breaches and remedies relating to Section 32 of the Sale of Land Act.

Misrepresentation and Trade Practices legislation

It is also possible that a dissatisfied purchaser of real estate may be able to take action for misrepresentation or for breaches of the Trade Practices Act or the Fair Trading Act.

There may also be other specific remedies available where the agent has engaged in improper conduct in order to bring about the sale.

Legal advice required

Of course, the details of each case must be considered to determine if there has been a breach, who is responsible for the breach, and what remedies may be available. Legal advice from a qualified lawyer is advised before any assumptions are made about a purchaser’s ability to end a contract on the basis of a breach of Section 32.

How to read the Section 32

Introduction

The problem with a Section 32 Vendor’s Statement can be not so much what it does contain, but what it SHOULD contain.

When reading a Section 32, the purchaser should approach from 3 levels:

What does the Section 32 contain?

Are the contents of the Section 32 accurate?

What is missing?

WARNING: Have us check the Section 32 for you!

The following information is of a general nature, and alerts consumers to the most basic of matters to be checked.
As a law firm, we must advise that it is dangerous for a purchaser to check a Section 32 Vendors Statement themselves.

Who is selling, and are they entitled to sell?

The vendor’s name/s will be included in the Section 32. But it is often the case that the person selling the property is not actually the owner of the property.

It is important to check that the person selling the property is entitled to do so. The first document to check is the Certificate of Title. If the names appearing on the Certificate of Title are different to the vendors, then further checks are made to verify the vendor’s right to sell. There may a Power of Attorney, or a Grant of Probate included in the Section 32. If not, then further investigations will be required.

Remember, many Section 32s are prepared by unqualified conveyancers who are not aware of the investigations needed to ensure that the vendor is entitled to sell, or the legal documents required to give the vendor authority to sell.

What is being sold, and does it measure up?

The Section 32 will also identify WHAT is being offered for sale.

You may have been shown a block of land by the agent, but is it the same block of land described in the Section 32? What if the agent has given you the wrong Section 32?

The Certificate of Title contained in the Section 32 will include a detailed description of the property for sale. In most cases the Section 32 will reference a Lot, and the Plan of Subdivision on which the Lot appears.

It is important to confirm that the land “on the ground” corresponds with the Lot described in the Section 32. This means checking that the dimensions of the Lot, as described in the Plan of Subdivision, are the same “on the ground” and that the fences are standing on their correct boundaries.

Where the property for sale is a unit, care should be taken to identify any carparks associated with the unit. It is often discovered that a carpark has its own Certificate of Title, and this has been overlooked when the Section 32 was prepared!

Quality issues

Can a panel shop open next door?

Is there a right to use the lane to access the garage?

Is gas available in the area?

Was the extension done by an owner-builder?

Have there been any unauthorised building works?

These are just some of the “quality” issues confronting a purchaser. Most of these can be answered in the Section 32. As long as the Section 32 is true and complete, there will, at least, be some indication of where further enquiries can be made.

Again, legal advice and assistance from a qualified lawyer can alert a purchaser to what SHOULD be in the Section 32, and what further enquiries should be considered. Please click on the link below for further information.

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